6 Psychological Tricks to Start Saving Money Today
You already know the importance of building up a savings reserve. Setting aside funds for unexpected emergencies or a future goal can help you feel more financially grounded.
But according to the Federal Reserve’s latest report on the Economic Well-Being of U.S. Households, four in 10 adults said they’d have trouble covering the cost of a $400 emergency. Although you’re aware of how essential saving money is to your financial health, many factors impact your ability to save money, including your own brain.
Here are a few clever tricks to train your mind into spending less and saving more.
1. Use prepaid debit cards
Spending money, particularly when using plastic methods of payment, is convenient — but convenience comes at a cost. Prepaid debit cards help create an extra barrier against spending.
When you load a preset amount of money onto a prepaid debit card, there’s a finite amount of funds you can burn through. To spend more than your initial budget on a prepaid card, you’ll have to manually go through the motions to transfer funds from your checking account into your prepaid debit account.
The additional steps just to get access to more funds can make you think twice about going over-budget. Plus, transferring funds from one account to another isn’t always instant which gives you more time to sleep on any unplanned purchases.
2. Count time, not prices
Sneaky marketing tactics can make you feel like you’re saving money by spending money, especially when there’s a big sale. If you’re a mindful shopper, you might ask yourself, “Do I actually need this 70% off item with the flashy reduced sticker price?” But if the pull of a “good” deal is too alluring, the better question is: “How much time will this cost me?”
Curb impulse spending by calculating how many hours of work you’ll have to clock-in, to earn back the cost of a spur-of-the-moment buy. For example, let’s say you’re looking at a $450 bike and you earn a wage of $20 per hour. That purchase will cost you 22.5 hours of work.
This pragmatic approach can help you decide whether your next splurge is actually worth it.
Related reading: 5 Money Mistakes to Avoid
3. Immerse yourself in visual cues
Dreaming up a big goal and writing it down is a helpful way to give purpose to your financial efforts. Your motivation to pursue and stay on track with your savings goals, however, can get derailed.
To remind your brain about what you’re working toward have a visual aid in place. For example, if your big goal is to own your home, search the web for real homes on the market that have everything you want in your perfect home. Then, print the image and put it somewhere that’s visible every day; for example, on your fridge, bathroom mirror, or next to your work computer. You can even take a screenshot of your ideal home and use it as your smartphone’s wallpaper.
Encountering a daily dose of motivation can help you stay steady on your financial plan toward your dream goal.
4. Closeout your tab
If much of your budget is blown while having drinks with friends, this easy mind trick is just for you. It can feel like a good idea to keep your tab open at the bar, but while it’s certainly convenient to keep a running tab, it opens the door to limitless spending.
Instead, close your tab after every order.
Again, this trick relies on the natural aversion you might experience while constantly waiting for the server to return with your check. At the end of the night, you might find that you didn’t spend as much on drinks just because you didn’t want to go through the extra effort.
Not only do you avoid excessive spending at the bar and free up funds for your savings goals, but you might save yourself an actual headache the next morning!
5. Schedule no-spend days
Sometimes, making the choice to save money and stay on-budget is harder to do at the moment. If this is true for you, commit to making the choice to save money in advance. Schedule no-spend days throughout the month. This could be every Tuesday, or you might even decide to start small by scheduling just one no-spend day each month — go at whatever pace is sustainable for you.
When your no-spend day comes up, you’ve already made a contract to yourself in black-and-white avoid any spending (no matter how small) on that day. This small, but powerful, measure of accountability can help you dodge spending triggers and keep you on track to save money.
6. Enlist an accountability buddy
Need extra accountability? Don’t worry, we all do sometimes and that’s perfectly OK! Find support from friends or family who are also struggling with similar savings goals as you. Seeking out an accountability buddy allows you to vocalize your goals, have a third-party check in on your progress, and encourage you when you’re in a savings slump.
Don’t have someone like this in your network? Speak to a financial coach here at The Gym for a supportive push to get you through the finish line. We’ll keep you accountable for your savings goals so you can feel more confident about your overall financial path.